Rep. David Schweikert, R-AZ, said this week that in the coming months he will introduce bipartisan legislation to establish a regulatory framework for prime non-agency MBS. “I’ve spent the last two years trying to figure out what the box will look like,” he said. Non-agency MBS participants continue to debate whether reform of the government-sponsored enterprises is necessary before the non-agency MBS market can return in a meaningful manner. At the ABS East conference sponsored by Information Management Network this week in Miami, Schweikert said a functioning non-agency MBS market is necessary before members of Congress can be convinced to move forward with GSE reform. “I need to have...

New issuance of non-agency MBS fell to an all-time low of $1.77 billion in the third quarter of 2012 as re-securitization activity nearly fell off the cliff, a new Inside MBS & ABS analysis reveals. The previous record low for non-agency MBS was $1.79 billion, set in the fourth quarter of last year. Issuance dropped 49.0 percent from the second to the third quarter, bringing year-to-date production to just $10.28 billion – off 60.1 percent from the first nine months of 2011. When it’s over, 2012 will likely represent...[Incluldes three data charts]

Springleaf Financial Services is ramping up to issue its third non-agency MBS this year, a nearly $900 million transaction backed primarily by vintage performing subprime loans. Springleaf Mortgage Loan Trust 2012-3 features a hefty 47.75 percent credit enhancement supporting its one AAA-rated tranche, according to a presale report from Standard & Poor’s. “Total credit enhancement comprises subordination, an interest shortfall reserve fund, excess interest, and overcollateralization,” noted the report. S&P said...

Supporters of a controversial plan to use eminent domain to seize underwater mortgages from non-agency MBS pools, write down their balances, refinance them into the FHA program and repackage them for sale to other investors are facing fresh challenges. In California, where the eminent domain plan was first introduced, the Joint Powers Authority formed by the County of San Bernardino and two of its cities, Ontario and Fontana, announced that its next meeting, which was scheduled for Thursday, Oct. 25, 2012, had been cancelled. The only business before the JPA is...

Participants in the non-agency mortgage-backed security market expect the amount of MBS backed by newly originated non-agency mortgages to increase significantly in 2013 and beyond – even without reform of the government-sponsored enterprises. A number of factors have combined to make the market ripe for new non-agency MBS, according to attendees at the ABS East conference sponsored by Information Management Network this week in Miami. “Borrowers want loans, lenders want to lend and investors want yield,” ... [Includes one data chart]

Redwood Trust issued a $320.34 million non-agency jumbo mortgage-backed security last week, its fifth of the year. With the latest transaction, the company has produced $1.67 billion in non-agency jumbo MBS in 2012. Grant Bailey, a managing director at Fitch Ratings, said Redwood’s post-bust securities are “the best transactions ever done in non-agency MBS history.” Sequoia Mortgage Trust 2012-5 received AAA ratings from Fitch, Kroll Bond Rating Agency and Moody’s Investors Service, with 7.30 percent ...

Shellpoint Partners filed a shelf registration statement with the Securities and Exchange Commission last week with plans to issue new non-agency mortgage-backed securities. Officials at the company have stressed that the MBS will be even more investor-friendly than the high-quality jumbo MBS issued by Redwood Trust. “Investors should know that what they are buying is a clean loan,” Eric Kaplan, a managing director at Shellpoint, said this week at the ABS East conference sponsored by Information Management ...

Republicans in the House will approve a package of legislation to reform the government-sponsored enterprises next year, according to the chief of staff for Rep. David Schweikert, R-AZ. The Arizona lawmaker is also working on a bipartisan bill to establish a framework for the non-agency mortgage-backed security market. Speaking at the ABS East conference sponsored by Information Management Network this week in Miami, Matthew Tully, chief of staff for Schweikert, said GSE reform is a top agenda item for House ...

With the help of consumer advocates, five borrowers filed a class-action lawsuit last week against Morgan Stanley alleging racial discrimination tied to the issuance of subprime mortgage-backed securities. The case appears to be the first to connect securitization and racial discrimination and the first class-action by borrowers against an investment bank. “It literally is the first case of Main Street holding Wall Street accountable for the abuses that happened and the aftermath in the Great Recession,” ...

Two more funds started to exit the Public-Private Investment Program in the third quarter of 2012. Returns from the program – which largely focuses on investing in vintage non-agency mortgage-backed securities – remain strong and the Public-Private Investment Funds can manage their holdings for at least the next five years, but four of the original nine PPIFs have now exited the PPIP. In July, RLJ Western terminated its PPIF’s investment period four months ahead of schedule. The notification occurred shortly after ...